Regulators Affirm Decision To Dock $49M From CL&P Storm Request

Affirming their earlier decision to cut nearly $50 million from Connecticut Light & Power's request to recover $414 million in storm costs, utility regulators passed on docking the utility for its widely criticized work during Tropical Storm Irene and the October nor'easter of 2011.

The end of the reimbursement case followed hundreds of pages in briefs, cost reports, public comments and inquiries from state officials. Of the approved costs, the majority will be folded into electric bills, some will be paid by the utility, and some will be paid by AT&T because of existing maintenance agreements.

State officials, such as the attorney general and the consumer counsel, had argued for deeper cuts because the issues with the company's tree trimming policy and high failure rates of the cross-arms on utility poles. Instead, the state Public Utilities Regulatory Authority docked the company because of issues relating to cost categorization, costs relating to tools and bonuses, and a large sum owed it by AT&T for storm recovery work.

Regulators said it would take up issues with Connecticut Light & Power's "deficient and inadequate response" to Irene and the October nor'easter during the utility's next rate case, with possible reductions to its carefully regulated profit margin, or return on equity.

Connecticut Light & Power is barred from increasing its rates until December because of an agreement made between Northeast Utilities, its parent company, and state officials during the company's merger with Massachusetts utility NStar.

Of the overall $49 million cut from its storm cost amount, about $18 million is eligible to be recovered by the utility in a later rate case, about $14 million will be covered as normal operating costs, and about $15 million is related to reimbursements it received, or is positioned to receive, from AT&T for storm work.

The cost of the utility's full request would have raised bills for a residential customer using 700 kilowatt hours a month by $3 a month for the next six years, the utility has said. Commercial and industrial customers would likely pay a larger increase.

Power companies are allowed to recoup "prudently" incurred costs from major storms as a rate increase. In March, the utility said it spent $462.3 million on five storms: $175 million on the October 2011 snowstorm, $156 million on storm Sandy in October 2012, $111 million on Irene, $11 million on a storm in June 2011, and $9 million on a September 2012 storm.

Of that, CL&P discounted $40 million in costs for Irene and the October nor'easter because of the merger agreement with state officials. It also reduced $8.3 million that was paid from a storm reserve.